How Cyber Attacks Affect Businesses

Cyberattacks can have disastrous effects on organisations and can result in irreparable damage or even business shutdowns.

Small to medium-sized business owners might think that they don’t have enough data to attract cyber attackers. However, for them, no business or data is insignificant.

According to Statista, in the 2023 financial year, medium-sized businesses in Australia faced an average financial loss of approximately 97.2 thousand Australian dollars per cybercrime incident reported to the Australian Cyber Security Centre. Meanwhile, small businesses reported a lower average financial loss, around 46 thousand Australian dollars.

This data highlights the substantial financial impact of cybercrime on businesses, with medium-sized enterprises bearing a significantly higher cost.

When you don’t have a strong cyber security setup, your chances of being attacked increase considerably.

Some of the most common and devastating effects of cyberattacks include:



1. Reputational Damage

Trust is a crucial element of an organisation and builds up its reputation. When customers interact with a business, they trust it and expect it to protect their privacy at all costs.

A single cyberattack that compromises customers’ data is enough to break their trust and put negative allegations on the company, ultimately damaging its reputation.

These negative allegations discourage customers, partners, and investors from becoming stakeholders in the business.

They may not feel secure sharing their sensitive information with a company that has already been a victim of a cyberattack, thereby providing its competition with an advantage.



2. Financial Losses

A successful cyberattack can lead an organisation to lose a considerable amount of money.

A report by Statista Research Department states that over half of businesses and organisations worldwide have reported losses of at least 300,000 U.S. dollars as a result of cyberattacks.

Following a cyberattack, companies need to hire cybersecurity experts to investigate the attack’s source, fix any damage, and employ new security measures to prevent future attacks.

These actions add extra costs to an already strained budget.

Moreover, the audit fees for companies that have been targeted by cyberattacks are 13.5% higher (.pdf) than those without any breach or attack.

Therefore, while a cybersecurity setup might initially seem costly, it can protect your business from future loss and save a lot of money in the long run.



3. Operational Disruptions

In addition to the direct financial losses, companies might also face indirect costs due to cyberattacks.

Even if the attack isn’t specifically done for money, it still can damage the company's finances through:

• Ransomware
• Distributed Denial of Service (DDoS) attacks
• Malware
• Data Breaches
• Phishing Attacks

These types of attacks result in operational downtime or loss of critical data, leading an organisation to face business delays or, in extreme cases, complete loss of business.

Here’s a study that indicates every 4 out of 10 malware attacks result in confidential data leakage, leading organisations to lose revenue and further business opportunities.



4. Compliance Problems

There are a variety of data protection and privacy regulations in different countries that require organisations to protect their customer’s data at all costs.

In Australia, The Privacy Act (1988) is the principal piece of legislation that oversees the collection, use, storage, and disclosure of personal information of individuals. Apart from that, each stage and territory has privacy laws governing how public sector companies handle personal information.

According to these legislations, in case of serious or repeated privacy breaches, the organisation will face severe penalties.

Investing in cyber security measures helps your organisation to stay compliant with these legislations and so avoid any legal problems.



5. Altered Business Practices

When a business is hit by a cyberattack, its daily operations face significant alteration.

Cyberattacks force the company to shift focus from their normal operations to dealing with the fallout of the attack, which can disrupt everything from customer service to internal communications.

The company may also need to implement new security practices and modify its methods of collecting and storing valuable information. This could involve incorporating advanced encryption techniques and conducting regular security audits.

NOTE: In response to cyberattacks, many companies have stopped storing their customer’s valuable information such as bank account details, credit card numbers, and birth dates. Instead, they are turning towards secure third-party services for handling and storing such data, reducing their direct exposure to data breaches.



6. Intellectual Property Theft

Intellectual property refers to the unauthorised use, reproduction, or distribution of inventions or ideas that are legally recognised as the property of a company or individual.

These include patents, trademarks, copyrights, trade secrets, and proprietary information. Much of this intellectual property is stored in cloud storage, where it’s vulnerable to cyberattacks.

If a competitor gains access to proprietary technology or product design, they can easily replicate the innovations, erasing the original company’s unique market advantage.

Also, the unauthorised use of trademarks and brand names can dilute the brand value, making it harder for customers to distinguish between the original and the fake product.



How to Minimise the Impact of Cyber Attacks on Businesses?

To protect your company against cyberattacks, it is essential to implement advanced security solutions.

These cyber security solutions include:

• Email Filters: Email filtering and threat detection tools are required to secure your business from malicious emails.
• Strong Passwords: Use strong passwords that are at least twelve characters long and include a mix of upper and lower-case letters, numbers, and symbols.
• Multi-factor Authentication: Implement two-factor or multi-factor authentication to add an extra layer of security to your data.
• Protect Your Wi-Fi: Your business Wi-Fi network provides an entry point for cyber attackers, so it is crucial to protect your Wi-Fi by using strong passwords and restricting remote access.
• Use Anti-Virus Software: Install and update anti-virus software regularly to protect your system against viruses and other threats.
• Advanced Threat Detection: Use AI-based software to identify sophisticated cyberattacks.
• Backup: Backing up all the valuable information helps you instantly recover data in case of a data breach.
• Educate Your Employees: To prevent social engineering, train your employees and teach them about how they can identify and respond to potential dangers.

That is all for today!



Remarks

Cyberattacks can have devastating effects on businesses.

No business, regardless of its size, is safe from these threats.

Financial losses can result from direct theft, ransom payments, and the costs associated with recovery and fines. Operational disruptions may change business activities, leading to the loss of revenue.

Moreover, a cyberattack can severely erode customer’s trust and damages the company’s reputation.

Therefore, regardless of the current costs, you should implement a strong cybersecurity setup to protect your business against cyberattacks.

That said, let’s conclude our talk.

I hope you found this article helpful and informative. If so, don’t forget to share it with others.

Till next time,

Cheers!